The housing market in Taiwan is facing challenges due to decisions made during the early democratic era that favored developers over first-time home buyers. The Taipei Times reported a 15.3 percent drop in housing transactions last month, falling below 20,000 units. Despite this decline, the market experienced growth during the first eight months of the year and is expected to grow overall.
This recent downturn has been attributed to intervention by Taiwan's Central Bank.
The issue of affordable housing persists despite an oversupply in Taiwan. Factors contributing to high housing prices include land planning decisions from the early democratic period that handed urban development control to developers.
Mi Shih, a scholar based at Rutgers University, has examined how Taiwan's economy shifted towards real estate. According to Shih, this shift began in the 1970s with issues surrounding land zoned as reserved for public facilities like roads and parks. During Martial Law, there was no legal obligation for local governments to promptly compensate private landowners whose land was designated as reserved. An estimate from 1988 indicated that "Taiwan had nearly 41,000 hectares of reserved land in total, with a compensatory cost almost double that of all Taiwanese governmental budgets combined."
A crisis emerged when compensation was required by September 1988 or risk de-zoning of the land. In response, lawmakers amended the Urban Planning Act (都市計畫法) and faced growing discontent among landowners. This period also saw protests against rising housing prices known as Snails Without Shells.
To address these issues, planners adopted transferable development rights (TDR) from US practices intended for planned development beyond property boundaries. However, Taiwan's TDR model allows developers significant freedom without government-designated receiving sites, enabling them to exceed local density limits frequently.
Shih noted that "3,764 development projects have utilized TDR since the early 2000s," adding floor area equivalent to approximately "100,875 new market-rate apartments." Julia Sass Rubin remarked on political shortcomings: “The sad thing is that in New Jersey...our politicians — especially at the legislative and county level — they don’t know what campaigning means.”
The regulatory leniency results in most land value benefits going to developers rather than local governments or communities. This reflects an authoritarian-era mindset retained by regulators during early democracy.
Further research by Shih and Chang Ying-hui highlights how TDR practices drive up prices through speculative calculations on permissible density numbers treated as profit by developers. They argue these technical decisions evade political scrutiny while intensifying capital interest in monetary values associated with urban landscapes.
Moreover, TDR projects increase nearby residential property values making it harder for lower-income groups seeking affordable homes according to additional studies conducted by Shih’s team.
Central Bank interventions aim solely at stabilizing markets amid ongoing crises without addressing underlying political economies favoring developer interests within residential developments' legal frameworks across Taiwan’s various permanent crises.
